Employers may not run criminal background checks until after a conditional offer of employment is made and may only run checks on those working in "sensitive" positions.

Effective November 18, most employers that operate in the city of Newark, New Jersey, must comply with a new ordinance that severely restricts their ability to utilize criminal background checks for employment purposes. Ordinance 12-1630[1] represents a recent trend in the enactment of new laws limiting an employer's use of criminal background checks.[2] Employers operating in Newark and in other jurisdictions that have enacted similar laws should begin revising their policies now to ensure compliance with these laws.

Key Provisions of the Newark Ordinance

The ordinance covers nearly all Newark employers and applies to all jobs physically performed "in whole or substantial part" in Newark. "Substantial part" is not defined by the ordinance.

Contrary to the prevailing practice in New Jersey, employers may not run criminal background checks on applicants until the employer determines the applicant is otherwise qualified for the position and a conditional offer of employment has been made.

Also contrary to common practice, the ordinance limits criminal background checks to applicants and current employees working in sufficiently "sensitive" positions. The ordinance does not define "position[s] . . . of such sensitivity" and does not offer guidance on this threshold.

Before making an adverse employment decision, the ordinance requires employers to consider six specific factors. These factors differ from those identified by the EEOC and existing New York law, complicating multistate employers' ability to comply with all applicable standards.

If an adverse decision is made based upon a criminal background check, employers must make disclosures, including a written explanation of the employer's decision, to the applicant or employee that are far more detailed than those required by the federal Fair Credit Reporting Act (FCRA).

Employers must give applicants or employees time to present evidence regarding their criminal history, disrupting existing practices under the FCRA.

While the ordinance does not create a private right of action, it will be enforced by an office or agency to be designated by the Mayor of Newark. Violators will be fined between $500 and $1,000 per occurrence.

The ordinance's only exemptions are (1) where employers are required by state or federal law to request a criminal background check regarding a given applicant or employee and (2) any positions designated by the employer for participation in a government program designed to encourage employment of individuals with a criminal history.

Who Is a Covered Employer?

The ordinance covers most employers that do business in Newark. It defines "employer" as any "person, company, corporation, firm, labor organization, or association" with "five (5) or more employees" that "does business, employs persons, or takes applications for employment within the city of Newark." "Employment" is defined broadly to include any "occupation, vocation, job, work, or employment with or without pay, including temporary or seasonal work [or] contracted work." Employers should note, however, that the ordinance applies only to jobs physically performed "in whole or substantial part" within the City of Newark. Again complicating compliance is the ordinance's failure to define "substantial part" or suggest an objective threshold for applicability to employees that partially perform their duties within Newark's boundaries. Even employers without a permanent physical presence in Newark must carefully assess the extent to which their mobile employees perform duties within Newark, as those positions may be subject to the ordinance.

Limitations on the Scope of Criminal Background Checks

The ordinance also limits the scope of permissible criminal background checks. Employers may obtain only an eight-year history of "indictable offense convictions" and a five-year history of "disorderly persons convictions or municipal ordinance violations." There is, however, no time limitation for inquiring about pending criminal charges or inquiries regarding murder, voluntary manslaughter, or sex offenses that require offender registration. These limitations are inconsistent with the EEOC's April 2012 Enforcement Guidance (which suggests that criminal background checks including more than 10 years of conviction history are suspect) and the FCRA (which does not generally limit reporting of criminal convictions). However, consistent with the EEOC's Enforcement Guidance, the ordinance prohibits employers from inquiring about or taking adverse action against an applicant or employee on the basis of arrest records, expunged or erased records, or sealed juvenile records.

Requirements for Job Postings and Application Forms

Under the ordinance, employers are prohibited from suggesting in advertisements or job postings that an applicant's criminal history will limit his or her eligibility for the position. Employers may not include any questions regarding criminal history in any application material presented to applicants prior to a conditional offer of employment. Consistent with the FCRA, before running a background check, employers must inform applicants or employees that the employer will perform a criminal background check and receive the individual's consent.

Factors to Consider When Reviewing Criminal History Information

An employer must consider the following six factors when evaluating criminal history information regarding any applicant or employee covered by the ordinance:

The nature of the crime and its relationship to the duties of the position sought or held

Any information pertaining to the degree of rehabilitation and good conduct, including any information produced by the applicant or employee or produced on his or her behalf

Whether the prospective job provides an opportunity for the commission of a similar offense

Whether the circumstances leading to the offense(s) are likely to reoccur

The amount of time that has elapsed since the offense(s)

Any certificate of rehabilitation issued by any state or federal agency

Several, but not all, of these factors overlap with those identified by the EEOC or New York Correction Law as relevant to assessing a candidate's or employee's criminal history. The lack of uniformity complicates compliance efforts for multistate employers. In particular, New York employers that wish to apply a single set of factors will need to add "whether the circumstances leading to the offense(s) are likely to reoccur" to the eight existing factors identified by New York Correction Law Article 23-A. Given that employers may struggle to assess a factor as fact-specific as "whether the circumstances leading to the offense(s) are likely to reoccur," compliance with the ordinance may require a more individualized analysis than compliance with New York law or the EEOC's Enforcement Guidance.

New Recordkeeping and Employee-Communication Obligations

Each employer must document its consideration of the six required factors and complete an "Applicant Criminal Record Consideration" form, which will be provided at a later date by the City of Newark. In addition, employers acting on criminal history information must communicate with applicants or employees "within a reasonable time" of making an adverse employment decision (such as refusal, rescission, or revocation of an offer or termination of employment). The employer must provide the applicant or employee (in one package sent by registered mail) with a written notice setting forth the outcome of and basis for the adverse action, a copy of the criminal background check record, a copy of the completed Applicant Criminal Record Consideration form, and information regarding the individual's right to submit additional evidence relevant to the employment decision.

After making an adverse decision and supplying the required disclosures, employers must allow applicants or employees 10 business days to provide additional information or evidence "related to the employer's consideration" of the six factors (such as evidence of rehabilitation). Employers are required to document their review and consideration of any such information and then notify the applicant or employee of the final decision. The communications required by the ordinance differ significantly from those required by the FCRA. Specifically, the FCRA requires employers to send a "pre-adverse action" notice prior to making an adverse decision, then wait a short time (typically five business days) prior to making a final determination and sending an "adverse action" notice. The ordinance, on the other hand, requires no communication prior to an adverse determination but requires employers to wait 10 business days before finalizing their decision. On its face, the ordinance suggests that employers must wait at least 15 business days to finalize an adverse employment action based on a criminal background check.

Recommendations

To ensure compliance with the Newark ordinance, employers who operate in the city should take the following actions:

Confirm that job postings and advertisements do not suggest that an individual's criminal history will disqualify him or her from employment.

Modify application materials to comply with the ban on criminal history questions.

Verify that criminal background checks are used only where the position in question is sufficiently "sensitive."

Ensure that notice and consent documents comply with both the Newark ordinance and the FCRA.

Revise internal criminal history review guidelines to account for the six required factors and consideration of evidence submitted by candidates or employees.

Modify communications (such as adverse action letters) and procedures to account for the differences between the ordinance and the FCRA, including the need to provide written explanations of decisions based on an applicant's or employee's criminal history.

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[2]. For example, Massachusetts and Philadelphia have enacted new laws prohibiting employers from asking applicants about criminal history, at least prior to interviewing the candidate or extending a conditional offer of employment. Indiana recently enacted a statute prohibiting employer inquiries regarding sealed records. In April 2012, the U.S. Equal Opportunity Employment Commission (EEOC) revised its Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (Enforcement Guidance) to reflect a more restrictive position on criminal background checks.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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